April 2, 2025, a day so branded “Liberation Day” by President Donald Trump, is when America will impose a wide range of tariffs for the aim of renegotiating its trade relationships.
The measures, to which the government has dubbed “reciprocal tariffs,” aim to match the tariffs other nations impose on United States goods. Tariff implementation will have very drastic repercussions across most sectors and global trade streams.
Scope and objectives of the tariffs
President Trump’s tariff policy is aimed at addressing what he perceives as long-term trade imbalance and unfair treatment by US’s trading partners. The rationale of the administration is that excessive foreign tariffs have harmed US manufacturers and caused America’s long-term trade deficits. Through retaliatory tariffs, America aims to incentivize foreign businesses to produce their goods locally and give American exports a more equitable treatment. The opposition counters that the tariffs could be shifted onto the consumers by means of higher prices and the complexities in world trade.
Products covered and tariff rate
Tariffs cover a wide range of products for several industries. The major product groups and tariff rates are:
- Autos: 25% will be imposed on importation of autos, targeting top automobile exporters to America such as Japan, Germany, and South Korea.
- Steel and aluminum: Completing past actions, more tariffs will be imposed on the importation of steel and aluminum, targeting countries such as Canada, Mexico, and China.
- Energy products: 10% tariff will be imposed on the importation of Canada, non-USMCA rules of origin compliant.
- Potash: Imports of potash from Canada and Mexico beyond USMCA preference will be taxed at a 10% rate.
- Chinese products: The additional 20% tariff applies to a diverse range of Chinese and Hong Kong imports, higher than the earlier 10% tariff.
Countries most affected
The extensive coverage across the globe of these tariffs will mean that a range of countries will be economically significantly affected:
- China: As the intended target in the primary, China is presently experiencing higher tariffs on an unbelievable array of goods, taking United States-China trade tensions to a new level.
- Canada and Mexico: Despite the USMCA, each nation has a tariff burden on specific commodities, most especially energy resources and potash, most notably those that are outside USMCA rules of origin.
- Member States of the European Union: Countries like Germany and France, highly reputed for exporting cars and steel, will be affected the hardest by the tariffs.
- Japan and South Korea: These countries’ gigantic American exports of cars and electronics will be impacted by the tariffs as well.
Economic and market implications
The imposing of these tariffs has already caused market unrest across the globe. For example, the Australian share market plunged 1.6% at midday on March 31, 2025, following a drop of 2% in the Wall Street S&P 500 index. The move is being driven by concerns of a broader trade war and how this will affect the world economy.
Tariffs in the energy industry will reduce demand, with economists demanding a reduction in the price of oil according to economic loss estimated. Despite rallies witnessed in recent times through geopolitical tensions, the persisting tariffs have increased concern about future demand and stability in the market.
Reactions of the affected nations
After the US tariffs, different affected countries have put in place or are proposing retaliatory actions:
- Canada: Canadian Prime Minister Justin Trudeau imposed 25% tariffs on $155 billion worth of imports from the US, with a tit-for-tat strike that imposed tariffs on $30 billion of goods such as beverages, paper goods, and cosmetics immediately.
- China: China indicated it would strike back, possibly employing the method for resolving disputes in the World Trade Organization and countermeasures against US exports.
